SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(Mark one)
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997
OR
( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT FOR THE
TRANSITION PERIOD FROM TO
--------- --------
Commission file number 0-439
------
American Locker Group Incorporated
- --------------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
DELAWARE 16-0338330
- ------------------------------- -----------------------------------
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
608 Allen Street, Jamestown, NY 14701
- --------------------------------------------------------------------------------
(Address of principal executive offices)
(716) 664-9600
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed
since last report)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements. Yes /X/ No / /
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS:
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.
Yes / / No / / Not Applicable / /
APPLICABLE ONLY TO CORPORATE ISSUERS:
State the number of shares outstanding of each of the issuer's class of common
stock equity as of the latest practicable date: October 29, 1997
Common Stock $1.00 par value - 601,755
Transitional Small Business Disclosure (check one) Yes / / No /X/
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
STATEMENTS OF CONSOLIDATED FINANCIAL CONDITION
AMERICAN LOCKER GROUP INCORPORATED AND SUBSIDIARIES
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
--------- ---------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $939,499 $1,229,222
Accounts and notes receivable, less
allowance for doubtful accounts
(1997 $346,063; 1996 $386,309) 3,921,302 3,363,277
Inventories 3,736,569 3,339,668
Prepaid expenses 74,044 97,917
Prepaid federal, state and foreign 0 28,986
income taxes
Deferred income taxes 619,096 619,096
--------- ----------
TOTAL CURRENT ASSETS 9,290,510 8,678,166
PROPERTY, PLANT AND EQUIPMENT
Land 500 500
Buildings 512,996 505,970
Machinery and equipment 7,682,916 7,617,871
--------- ----------
8,196,412 8,124,341
Less allowances for depreciation and
amortization 7,151,210 6,782,429
--------- ----------
1,045,202 1,341,912
--------- ----------
TOTAL NON-CURRENT ASSETS 1,045,202 1,341,912
--------- ----------
TOTAL ASSETS $10,335,712 $10,020,078
=========== ==========
</TABLE>
2
<PAGE>
STATEMENTS OF CONSOLIDATED FINANCIAL CONDITION
AMERICAN LOCKER GROUP INCORPORATED AND SUBSIDIARIES
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
--------- -------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Demand note payable $0 $1,125,000
Accounts payable and accrued expenses:
Trade 1,390,556 660,202
Related party 0 381,196
--------- ----------
1,390,556 1,041,398
Commissions, salaries, wages and taxes thereon 202,818 298,671
Other accrued expenses 990,089 447,962
Current portion of long-term obligations 663,000 600,000
--------- ----------
TOTAL CURRENT LIABILITIES 3,246,463 3,513,031
DEFERRED INCOME TAXES 44,580 44,580
LONG-TERM OBLIGATIONS
Long-term debt, less current portion 2,596,750 700,000
Deferred pension income 271,690 271,690
Postretirement benefits 132,630 132,630
--------- ----------
3,001,071 1,404,320
--------- ----------
TOTAL LIABILITIES 6,292,113 4,661,931
STOCKHOLDERS' EQUITY
Common stock, par value $1 per
share--authorized 4,000,000 shares, issued 601,755 800,024
601,755 shares in 1997 and 800,024 in 1996
Other capital 0 1,027,527
Retained earnings 3,562,800 3,645,183
Foreign currency translation adjustment (120,956) (114,587)
--------- ----------
TOTAL STOCKHOLDERS' EQUITY 4,043,599 5,358,147
--------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $10,335,712 $10,020,078
========== ==========
See notes to consolidated financial statements.
</TABLE>
3
<PAGE>
STATEMENTS OF CONSOLIDATED OPERATIONS
AMERICAN LOCKER GROUP INCORPORATED AND SUBSIDIARIES
<TABLE>
<CAPTION>
Three Months Ended September 30,
1997 1996
----- -----
<S> <C> <C>
Net sales $6,906,402 $5,955,670
Cost of products sold 4,862,030 4,173,990
---------- ----------
2,044,372 1,781,680
Selling, administrative and general 1,303,113 1,188,059
expenses
---------- ----------
741,259 593,621
Interest and dividend income 16,856 15,888
Other income (expense)--net 26,210 54,529
Interest expense (42,367) (60,093)
---------- ----------
INCOME BEFORE INCOME TAXES 741,958 603,945
Income taxes 318,071 239,210
---------- ----------
NET INCOME $423,887 $364,735
========= =========
Per share of common stock:
NET INCOME $0.57 $0.45
========= ==========
See notes to consolidated financial statements.
</TABLE>
4
<PAGE>
STATEMENTS OF CONSOLIDATED OPERATIONS
AMERICAN LOCKER GROUP INCORPORATED AND SUBSIDIARIES
<TABLE>
<CAPTION>
Nine Months Ended September 30,
1997 1996
---- -----
<S> <C> <C>
Net sales $19,912,975 $16,863,680
Cost of products sold 13,916,937 11,712,000
------------ ------------
5,996,038 5,151,680
Selling, administrative and general
expenses 3,923,655 3,695,427
------------ ------------
2,072,383 1,456,253
Interest and dividend income 32,202 34,439
Other income (expenses)--net 100,607 160,272
Interest expense (103,154) (165,060)
------------ ------------
INCOME BEFORE INCOME TAXES 2,102,038 1,485,904
Income taxes 900,372 592,602
------------ ------------
NET INCOME $1,201,666 $893,302
========== =========
Per share of common stock:
NET INCOME $1.52 $1.11
========== ==========
See notes to consolidated financial statements.
</TABLE>
5
<PAGE>
STATEMENTS OF CONSOLIDATED CASH FLOWS
AMERICAN LOCKER GROUP INCORPORATED AND SUBSIDIARIES
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $1,201,666 $893,302
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 446,740 474,486
Gain on disposition of property, plant and 490 (8,388)
equipment
Change in assets and liabilities:
Accounts and notes receivable (558,025) 250,379
Income taxes (832,458)
Inventories (396,901) (440,904)
Prepaid expenses 52,859 (57,702)
Accounts payable and accrued expenses 795,032 (108,050)
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,541,861 170,665
Cash flows from investment activities:
Purchase of property, plant and equipment (154,033) (164,341)
Proceeds from sale of property, plant and 3,913 13,242
equipment
--------- ---------
NET CASH USED IN INVESTING ACTIVITIES (150,120) (151,099)
Cash flows from financing activities:
(Payments) under long-term debt agreement (405,250) (450,000)
Additional long-term borrowing 2,365,000 1,000,000
Net (payments) borrowings under line of credit (1,125,000) (200,000)
agreement
Treasury stock purchased/retired (2,509,845) (195,298)
--------- ---------
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES (1,675,095) 154,702
--------- ---------
Effect of exchange rate changes on cash (6,369) 4,247
--------- ---------
Net increase (decrease) in cash (289,723) 178,515
Cash and cash equivalents at beginning of year 1,229,222 1,080,487
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $939,499 $1,259,002
======= =========
Supplemental cash flow information: Cash paid during the
period for:
Interest $103,154 $165,060
======== =========
Income taxes $641,938 $1,393,246
======== =========
See notes to consolidated financial statements.
</TABLE>
6
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AMERICAN LOCKER GROUP INCORPORATED AND SUBSIDIARIES
1. The accompanying unaudited consolidated condensed financial statements have
been prepared in accordance with instructions to Form 10-QSB and, in the opinion
of the Company, include all adjustments, consisting of normal recurring
accruals, considered necessary for a fair presentation of such condensed
financial statements. The condensed financial statements do not include all
information and footnotes normally associated with statements of results of
operations, financial condition, and cash flows prepared in conformity with
generally accepted accounting principles.
2. Provision for income taxes is based upon the estimated annual effective tax
rate.
3. Net income per common share is computed by dividing net income by the
weighted average number of shares outstanding, plus, when dilutive, the common
stock equivalents which would arise from the exercise of stock options during
the periods: 792,674 for the nine months ended September 30, 1997 and 745,951
for the quarter ended September 30, 1997; 809,366 shares for the nine months
ended September 30, 1996 and 804,072 for the quarter ended September 30, 1996.
4. Inventories are valued at the lower of cost or market. Cost is determined by
using the last-in, first-out method for substantially all of the inventories.
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------ -----------
<S> <C> <C>
Raw materials $1,450,408 $ 982,888
Work-in-process 1,610,253 1,742,320
Finished goods 1,687,081 1,625,633
----------- -----------
$ 4,747,742 $4,350,841
Less allowance to
reduce carrying value
to LIFO basis 1,011,173 1,011,173
----------- ----------
$3,736,569 $3,339,668
========= =========
</TABLE>
7
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
AMERICAN LOCKER GROUP INCORPORATED AND SUBSIDIARIES
LIQUIDITY AND SOURCES OF CAPITAL
The Company continues to have adequate resources and liquidity to maintain and
expand its operations. Working capital at September 30, 1997 was $6,044,000, up
$879,000 over working capital of $5,165,000 at December 31, 1996. The increased
working capital resulted primarily from profitable operations during the first
nine months of 1997. The ratio of current assets to current liabilities was 2.9
to 1 at September 30, 1997, as compared to a ratio of 2.5 to 1 at December 31,
1996. The Company's $3,000,000 line of credit is available to assist in
satisfying future working capital needs, if required.
On August 27, 1997, the Company completed the previously announced purchase of
187,385 shares of Company common stock from a foundation controlled by a
director of the Company and from certain members of his family. The shares were
purchased for $12.625 per share, or $2,365,735 in the aggregate, and the
purchase was funded through a $2,315,000 increase in the Company's existing bank
term loan.
The Company anticipates that its requirements for funds for operations and
capital expenditures will be provided principally from cash generated from
future operations.
FIRST NINE MONTHS 1997 VS. FIRST NINE MONTHS 1996
Sales for the first nine months of 1997 were $19,913,000, up $3,049,000 or 18.1%
compared to sales of $16,864,000 during the same period in 1996. Plastic locker
sales for the first nine months were $11,856,000 compared to $9,212,000 during
the first nine months of 1996, an increase of 28.7%. Cluster Box Unit (CBU)
sales were $8,780,000, compared to approximately $6,400,000 in the first nine
months of 1996, an increase of 37.2%.
As previously reported, the CBU is a modernization of the Neighborhood Delivery
and Collection Box Unit (NDCBU). The United States Postal Service has purchased
NDCBU's for approaching two decades. The Company's objective has been to market
its CBU as a viable replacement and successor to the NDCBU. The USPS recently
instituted procurement policy that strictly limits purchase of NDCBU's in
relation to CBU's. The Company anticipates that execution of this policy will
result in higher total CBU volumes.
We have two competitors for CBU's, both with aluminum units. One is currently
shipping, and we anticipate the second to begin shipping in the near future. We
believe that our CBU's continue to offer the best value (when compared to
aluminum CBU's or NDCBU's) based on total life cycle costs and features
delivered to the customer.
Pursuant to an amendment to the existing USPS contract, the Company extended a
small price reduction to the USPS, effective October 27, 1997 through mid-
April, 1998. This amendment also sets the minimum quantity for each model CBU at
one. This minimum quantity specification limits the USPS liability and is
agreeable to the Company in light of the USPS policy that restricts purchase of
NDCBU's
8
<PAGE>
in relation to CBU's. In April, 1998, the USPS will have three one-year options
available for exercise on the USPS contract.
The Company is free to market the CBU to other postal services around the world.
However, the suitability of our current design for application to other postal
services is unknown. In early October, the Company exhibited all three model
CBU's and the Outdoor Parcel Locker at POST-EXPO '97 in Hamburg, Germany.
Approximately twenty postal services were in attendance and we received
significant interest in our products. Although the Company anticipates many
obstacles in selling the CBU to other postal services, we intend to vigorously
pursue these opportunities.
All other sales, metal and electronic, were $8,057,000 for the first nine months
of 1997 compared to $7,652,000 for the first nine months of 1996. This increase
of approximately 5% relates to a general price increase and increased demand for
our products in the international markets. On September 29, 1997, the Company
consolidated its National Service Center (previously located in Elk Grove
Village, Illinois) into its lock manufacturing facility in Ellicottville, New
York. This consolidation will result in annual savings due to lower facilities
costs, improved efficiencies, and reduced inventories.
Consolidated cost of products sold as a percentage of sales was 70% during the
first nine months of 1997, the same as 1996.
Selling, general and administrative costs for the first nine months of 1997
increased $228,228 over the same period in 1996. Selling, administrative and
general expense as a percent of sales was 19.7%, down from 21.9% during the
first nine months of 1996, due to increased sales volume.
Other income-net of $101,000 in the first nine months of 1997 was down $59,000
from the same period in 1996.
Interest expense in the first nine months of 1997 decreased $62,000 from the
same period in 1996 as a result of lower outstanding debt.
THIRD QUARTER 1997 VS. THIRD QUARTER 1996
Third quarter sales were $6,906,000, up $950,000 or 16% for the same period in
1996. Plastic sales of $4,382,000 were up 19.4% or $711,000 over 1996's third
quarter. Sales of other products, metal and electronic lockers were $2,524,000
during the third quarter of 1997, up 10.5% or $239,000 over 1996's third
quarter.
Consolidated cost of products sold as a percentage of sales was 70.4% during the
third quarter of 1997, up from 70.1% during the third quarter of 1996.
Selling, administrative and general expenses as a percent of net sales were 19%
during the third quarter of 1997, compared to 20% in the third quarter of 1996.
Other income - net of $26,000 in the third quarter of 1997 was down from $55,000
in the third quarter of 1996.
Interest expense in the third quarter of $42,000 declined from $60,000 in the
third quarter of 1996.
9
<PAGE>
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Forward-looking statements in this report, including without limitation,
statements relating to the Company's plans, strategies, objectives,
expectations, intentions and adequacy of resources, are made pursuant to the
Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995.
Investors are cautioned that such forward-looking statements involve risks and
uncertainties including without limitation the following: (i) the Company's
plans, strategies, objectives, expectations, and intentions are subject to
change at any time at the discretion of the Company, (ii) the Company's plans
and results of operations will be affected by the Company's ability to manage
its growth and inventory, and (iii) other risks and uncertainties indicated from
time to time in the Company's filings with the Securities and Exchange
Commission.
PART II
Item 5. Other Matters
As noted in "Management's Discussion and Analysis of Financial Condition
and Results of Operations - Liquidity and Sources of Capital," the Company
has completed the previously announced repurchase of 187,385 shares of
Company common stock from a foundation controlled by a director of the
Company and certain members of his family.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 10 Material Contracts
Exhibit 27 Financial Data Schedule dated September 30, 1997.
(b) The Company did not file any reports on Form 8-K during the three
months ended September 30, 1997.
10
<PAGE>
S I G N A T U R E
-----------------
In accordance with the requirements of the Exchange Act, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
AMERICAN LOCKER GROUP INCORPORATED
(Registrant)
/S/ HAROLD J. RUTTENBERG
------------------------
Harold J. Ruttenberg
Chairman, Chief Executive Officer,
Treasurer and Principal Accounting
Officer
Date OCTOBER 29, 1997
----------------
11
<PAGE>
EXHIBIT INDEX
PRIOR FILING OR
SEQUENTIAL PAGE
EXHIBIT NO. NO. HEREIN
- ----------- ----------
10.1 Amendment dated August 22, 1997 to Corporate Term
Loan Agreement dated August 30, 1991 between
American Locker Group Incorporated and Manufacturers
and Traders Trust Company
10.2 Modification M05 to USPS Contract #072368-96-B-0741
which replaces steel pedestals with aluminum
pedestals for American Locker Outdoor Parcel
Lockers
10.3 Modification MO6 to USPS Contract #072368-96-B-0741
regarding prices and minimum quantities through
April 14, 1998
27 Financial Data Schedule
12
<PAGE>
EXHIBIT 10.1
AMENDMENT AGREEMENT
This Amendment Agreement is made as of this 22nd day of August 1997,
between Manufacturers and Traders Trust Company, a New York banking organization
having its chief executive office at One M&T Plaza, Buffalo, New York 14240,
(the "Bank") and American Locker Group Incorporated, a Delaware business
corporation having its chief executive office at 608 Allen Street, P.O. Box
1000, Jamestown, New York 14702-1000, (the "Borrower").
WHEREAS, the Bank and the Borrower previously entered into a
Corporate Term Loan Agreement dated August 30, 1991, which was amended by (1) an
Amendment Agreement dated as of May 1, 1994 and (2) an Amendment Agreement dated
March 12, 1996 (as so amended, the "Loan Agreement"); and
WHEREAS, the Bank and the Borrower now desire to amend certain
provisions of the Loan Agreement;
NOW, THEREFORE, effective as of the date of this Amendment
Agreement, the Bank and the Borrower agree that:
1. A new clause (ji) to read "(ji) Loan I" is added to Section 1 of
the Loan Agreement after clause (j) of such Section 1, and a new clause (jii) to
read "(jii) Loan II" is added to such Section 1 after such clause (ji).
<PAGE>
2. Section 2 of the Loan Agreement is renumbered "Section 2A" and is
amended in its entirety to read as follows:
2A. LOAN I.
a. MAKING AND OBTAINING LOAN I. Upon and subject to each
term and condition of this Agreement, the Bank shall
make Loan I to the Borrower, and the Borrower shall
obtain Loan I from the Bank. The principal amount of
Loan I shall be $1,000.000.
b. TERMINATION OF OBLIGATION. Any obligation of the Bank to
make Loan I shall terminate no later than August 30,
1997.
c. REPAYMENT. The Borrower shall repay the principal amount
of Loan I to the Bank in 60 monthly installments of
$16,667 each, with the first of such installments to
become due on September 30, 1997 and one of such
installments to become due on the last day of each
succeeding calendar month through August 31, 2002, when
the Borrower shall repay the outstanding principal
amount of Loan I to the Bank and pay to the Bank all
interest owing pursuant to Loan I and remaining unpaid
and all other amounts owing by the Borrower to the Bank
pursuant to this Agreement in connection with Loan I and
remaining unpaid.
d. OPTIONAL REPAYMENT IN ADVANCE. The Borrower shall have
the option of repaying the principal amount of Loan I to
the Bank in advance in full or in part at any time and
from to time; provided, however, that (i) the Borrower
shall pay to the Bank a premium equal to 3% of the
principal amount repaid; (ii) the amount of any such
repayment in part shall be an integral multiple of
$50,000 and (iii) upon making any such repayment in full
the Borrower shall pay to the Bank all interest owing
pursuant to this Agreement in connection with Loan I and
remaining unpaid and all other amounts owing by the
Borrower to the Bank pursuant to this Agreement in
connection with Loan I and remaining unpaid. Each such
repayment in part shall be applied to the installments
of the principal amount of Loan I in the inverse order
of such installments becoming due.
e. INTEREST. From and including the date Loan I is made to
but not including the date the outstanding principal
amount of Loan I is
2
<PAGE>
repaid in full, the Borrower shall pay to the Bank
interest, calculated on the basis of a 360-day year for
the actual number of days of each year (365 or 366, as
applicable), on such outstanding principal amount at a
rate per year that shall (i) on each day beginning
before the maturity, whether by acceleration or
otherwise, of such outstanding principal amount be ____%
and (ii) on each day subsequent to the last day
described in clause (i) of this sentence be 3% above the
rate in effect such subsequent day as the Bank's Prime
Rate; provided, however, that (A) in no event shall such
interest be payable at a rate in excess of the maximum
rate permitted by applicable law and (B) solely to the
extent necessary to result in such interest not being
payable at a rate in excess of such maximum rate, any
amount that would be treated as part of such interest
under a final judicial interpretation of applicable law
shall be deemed to have been a mistake and automatically
canceled, and, if received by the Bank, shall be
refunded to the Borrower, it being the intention of the
Bank and of the Borrower that such interest not be
payable at a rate in excess of such maximum rate. Except
as otherwise provided in Section 2Ac or 2Ad of this
Agreement, payments of such interest shall become due on
the last day of each calendar month, beginning on
September 30, 1997.
f. GENERAL PROVISIONS AS TO REPAYMENT AND PAYMENT.
Repayment of the principal amount of Loan I, payment of
all interest owing pursuant to this Agreement in
connection with Loan I and payment of all other amounts
owing by the Borrower to the Bank pursuant to this
Agreement in connection with Loan I shall be made in
lawful money of the United States and in immediately
available funds at the banking office of the Bank
located at One M&T Plaza, Buffalo, New York, or at such
other office of the Bank as may at any time and from
time to time be specified in any notice delivered, given
or sent to the Borrower by the Bank. No such repayment
or payment shall be deemed to have been received by the
Bank until received by the Bank at the office of the
Bank determined in accordance with the preceding
sentence, and any such repayment or payment received by
the Bank at such office after 2:00 P.M. on any day shall
be deemed to have been received by the Bank at the time
such office opens for business on the next business day
of the Bank. If the time by which any of the principal
amount of Loan I is to be repaid is extended by
operation of law or otherwise, the Borrower shall pay
interest on the outstanding portion thereof during such
period of extension as provided in Section 2Ae of this
Agreement.
3
<PAGE>
3. There is added to the Loan Agreement after Section 2A thereof a
new Section 2B to read as follows:
2B. LOAN II.
a. MAKING AND OBTAINING LOAN II. Upon and subject to each
term and condition of this Agreement, the Bank shall
make Loan II to the Borrower, and the Borrower shall
obtain Loan II from the Bank. The principal amount of
Loan II shall be $2,315,000.
b. TERMINATION OF OBLIGATION. Any obligation of the Bank to
make Loan II shall terminate no later than August 30,
1997.
c. REPAYMENT. The Borrower shall repay the principal amount
of Loan II to the Bank in 60 monthly installments of
$38,583 each, with the first of such installments to
become due on September 30, 1997 and one of such
installments to become due on the last day of each
succeeding calendar month through August 31, 2002, when
the Borrower shall repay the outstanding principal
amount of Loan II to the Bank and pay to the Bank all
interest owing pursuant to this Agreement in connection
with Loan II and remaining unpaid and all other amounts
owing by the Borrower to the Bank pursuant to this
Agreement in connection with Loan II and remaining
unpaid.
d. OPTIONAL REPAYMENT IN ADVANCE. The Borrower shall have
the option of repaying the principal amount of Loan II
to the Bank in advance in full or in part at any time
and from time to time; provided, however, that (i) the
amount of any such repayment in part shall be an
integral multiple of $50,000 and (ii) upon making any
such repayment in full the Borrower shall pay to the
Bank all interest owing pursuant to this Agreement in
connection with Loan II and remaining unpaid and all
other amounts owing by the Borrower to the Bank pursuant
to this Agreement in connection with Loan II and
remaining unpaid. Each such repayment in part shall be
applied to the installments of the principal amount of
Loan II in the inverse order of such installments
becoming due.
e. INTEREST. From and including the date Loan II is made to
but not including the date the outstanding principal
amount of Loan II is repaid in full, the Borrower shall
pay to the Bank interest, calculated on the basis of a
360-day year for the actual number of days of each year
(365 or 366, as applicable), on such outstanding
principal amount at a rate per year that shall (i) on
each day beginning before the maturity, whether by
acceleration or
4
<PAGE>
otherwise, of such outstanding principal amount be 1/4%
above the rate in effect such day as the Bank's Prime
Rate and (ii) on each day subsequent to the last day
described in clause (i) of this sentence be 3% above the
rate in effect such subsequent day as the Bank's Prime
Rate; provided, however, that (A) in no event shall such
interest be payable at a rate in excess of the maximum
rate permitted by applicable law and (B) solely to the
extent necessary to result in such interest not being
payable at a rate in excess of such maximum rate, any
amount that would be treated as part of such interest
under a final judicial interpretation of applicable law
shall be deemed to have been a mistake and automatically
canceled, and, if received by the Bank, shall be
refunded to the Borrower, it being the intention of the
Bank and of the Borrower that such interest not be
payable at a rate in excess of such maximum rate. Except
as otherwise provided in Section 2Bc or 2Bd of this
Agreement, payments of such interest shall become due on
the last day of each calendar month, beginning on
September 30, 1997.
f. GENERAL PROVISIONS AS TO REPAYMENT AND PAYMENT.
Repayment of the principal amount of Loan II, payment of
all interest owing pursuant to this Agreement in
connection with Loan II and payment of all other amounts
owing by the Borrower to the Bank pursuant to this
Agreement in connection with Loan II shall be made in
lawful money of the United States and in immediately
available funds at the banking office of the Bank
located at One M&T Plaza, Buffalo, New York, or at such
other office of the Bank as may at any time and from
time to time be specified in any notice delivered, given
or sent to the Borrower by the Bank. No such repayment
or payment shall be deemed to have been received by the
Bank until received by the Bank at the office of the
Bank determined in accordance with the preceding
sentence, and any such repayment or payment received by
the Bank at such office after 2:00 P.M. on any day shall
be deemed to have been received by the Bank at the time
such office opens for business on the next business day
of the Bank. If the time by which any of the principal
amount of Loan II is to be repaid is extended by
operation of law or otherwise, the Borrower shall pay
interest on the outstanding portion thereof during such
period of extension as provided in Section 2Be of this
Agreement.
4. Section 3 of the Loan Agreement is amended in its entirety to
read as follows:
5
<PAGE>
3. PREREQUISITES TO EITHER LOAN. The obligation of the Bank
to make either Loan shall be conditioned upon the
following:
a. NO DEFAULT. (i) There not having occurred or existed at
any time during the period beginning on the date of this
Agreement and ending at the time such Loan is to be
made, and there not existing at the time such Loan is to
be made, any Event of Default or Potential Event of
Default and (ii) the Bank not believing in good faith
that any Event of Default or Potential Event of Default
has so occurred or existed or so exists;
b. REPRESENTATIONS AND WARRANTIES. (i) Each representation
and warranty made in this Agreement being true and
correct as of all times during the period beginning on
the date of this Agreement and ending at the time such
Loan is to be made and as of the time such Loan is to be
made, except to the extent updated in (A) a certificate
executed by the Chief Executive Officer or the President
or a Vice President of the Borrower and by the chief
financial officer of the Borrower and received by the
Bank before the time such Loan is to be made or (B)
Exhibit A attached to and made a part of this Agreement,
(ii) each other representation and warranty made to the
Bank by or on behalf of the Borrower or by or on behalf
of any Subsidiary or Other Obligor before the time such
Loan is to be made being true and correct as of the date
thereof, except to the extent updated in (A) a
certificate executed by the Chief Executive Officer or
the President or a Vice President of the Borrower and by
the chief financial officer of the Borrower and received
by the Bank before the time such Loan is to be made or
(B) Exhibit A attached to and made a part of this
Agreement, (iii) each financial statement provided to
the Bank by or on behalf of the Borrower or by or on
behalf of any Subsidiary or Other Obligor before the
time such Loan is to be made being true and correct as
of the date thereof and (iv) the Bank not believing in
good faith that (A) any such representation or warranty,
except as so updated, was or is other than true and
correct as of any such time, or as of such date, of
determination of the truth and correctness thereof or
(B) any such financial statement was other than true and
correct as of the date thereof;
c. PROCEEDINGS. The Bank being satisfied as to each
corporate or other proceeding in connection with any
transaction contemplated by this Agreement; and
d. RECEIPT BY BANK. The receipt by the Bank at or before
the time such Loan is to be made of the following, in
form and substance satisfactory to the Bank:
6
<PAGE>
i. If such Loan is Loan I, a Promissory Note I,
appropriately completed and duly executed by
the Borrower;
ii. If such Loan is Loan II, a Promissory Note II,
appropriately completed and duly executed by
the Borrower;
iii. A Ratification of General Guaranty Agreement,
appropriately completed and duly executed by
American Locker Security Systems, Inc.;
iv. A Ratification of General Guaranty Agreement,
appropriately completed and duly executed by
American Locker Company, Inc.;
v. A certificate executed by the Chief Executive
Officer or the President or a Vice President of
the Borrower and by the chief financial officer
of the Borrower and stating that (A) there did
not occur or exist at any time during the
period beginning on the date of this Agreement
and ending at the time such Loan is to be made,
and there does not exist at the time such Loan
is to be made, any Event of Default or
Potential Event of Default and (B) each
representation and warranty made in this
Agreement was true and correct as of all times
during the period beginning on the date of this
Agreement and ending at the time such Loan is
to be made and is true and correct as of the
time such Loan is to be made, except to the
extent updated in a certificate executed by the
Chief Executive Officer or the President or a
Vice President of the Borrower and by the chief
financial officer of the Borrower and received
by the Bank before the time such Loan is to be
made.
vi. Evidence that each of the Borrower and all
Subsidiaries is at the time such Loan is to be
made in good standing under the law of the
jurisdiction in which it is incorporated;
vii. A copy of the certificate or articles of
incorporation or other charter document of each
of the Borrower and all Subsidiaries certified
by its Secretary to be complete and accurate at
the time such Loan is to be made;
viii. A copy of the by-laws or other organizational
document of each of the Borrower and all
Subsidiaries certified by its Secretary to be
complete and accurate at the time such Loan is
to be made;
7
<PAGE>
ix. Evidence of the taking, and of the continuation
in full force and effect at the time such Loan
is to be made, of each corporate or other
action of the Borrower or of any other Person
necessary to authorize the obtaining of such
Loan by the Borrower, the execution, delivery
to the Bank and performance of each Loan
document and the imposition or creation of any
security interest, mortgage and other lien and
encumbrance imposed or created pursuant to any
Loan Document;
x. Evidence that each requirement contained in any
Loan Document with respect to insurance is
being met at the time such Loan is to be made;
xi. Each additional writing required by any Loan
Document or deemed necessary or desirable by
the Bank at the sole option of the Bank; and
xii. Payment of all costs and expenses payable
pursuant to the first sentence of Section 8 of
this Agreement at or before the time such Loan
is to be made.
5. Section 4a of the Loan Agreement is amended in its entirety to
read as follows:
a. USE OF PROCEEDS. The proceeds of both Loans will be used
only (i) to refinance existing indebtedness of the
Borrower to the Bank in the approximate outstanding
principal amount of $950,000 and (ii) to repurchase
187,385 shares of stock of the Borrower from Thomas P.
Johnson and his family.
6. The reference in Section 5d of the Loan Agreement to "240%"
is changed to "200%."
7. The reference in clause (iii) of Section 6e of the Loan
Agreement to "$600,000" is changed to "$800,000."
8
<PAGE>
8. Section 10j of the Loan Agreement is amended in its entirety
to read as follows:
j. LOAN. "Loan" means either Loan I or Loan II.
9. There is added to the Loan Agreement after Section 10j thereof
a new Section 10j(i) to read as follows:
j(i). LOAN I. "Loan I" means a loan by the Bank to the
Borrower in the principal amount shown in Section 2Aa
of this Agreement.
10. There is added to the Loan Agreement after Section 10j(i)
thereof a new Section 10j(ii) to read as follows:
j(ii). LOAN II. "Loan II" means a loan by the Bank to
the Borrower in the principal amount shown in Section
2Ba of this Agreement.
11. The references in the first sentence of Section 4f of the Loan
Agreement, the first sentence of Section 7 of the Loan Agreement, the first
sentence of Section 9a of the Loan Agreement and the first sentence of Section
9j of the Loan Agreement to "the Loan" are changed to "each Loan."
12. The reference in the third sentence of Section 4f of the Loan
Agreement, the second sentence of Section 8 of the Loan Agreement, clauses (i)
and (ix) of Section 10h of the Loan Agreement and the first sentence of Section
11 of the Loan Agreement to "the Loan" are changed to "either Loan."
9
<PAGE>
13. The Loan Agreement is changed by this Amendment Agreement only
to the extent that it is specifically amended by this Amendment Agreement, and,
as so amended, the Loan Agreement shall remain in full force and effect.
Effective as of the date of this Amendment Agreement, references in the Loan
Agreement to "this Agreement" shall be deemed to be references to the Loan
Agreement as amended by this Amendment Agreement.
10
<PAGE>
IN WITNESS WHEREOF, the Bank and the Borrower have caused this
Amendment Agreement to be duly executed on the date shown at the beginning of
this Amendment Agreement.
MANUFACTURERS AND TRADERS TRUST COMPANY
By /S/ RICHARD S. BAGOSY
-----------------------------------
Richard S. Bagosy, Assistant Vice
President
AMERICAN LOCKER GROUP INCORPORATED
By /S/ HAROLD J. RUTTENBERG
----------------------------------
Harold J. Ruttenberg, Chairman,
Chief Executive Officer and Treasurer
11
<PAGE>
STATE OF NEW YORK )
: SS.
COUNTY OF ERIE )
On the 21st day of August 1997, before me personally came Richard S.
Bagosy, to me known, who, being by me duly sworn, did depose and say that he
resides at 178 Crystal Springs Court, East Amherst, New York 14051; that he is
an Assistant Vice President of Manufacturers and Traders Trust Company, the
corporation described in and which executed the above instrument; and that he
signed his name thereto by order of the board of directors of said corporation.
MARY LISA GODERT
--------------------------
Notary Public
STATE OF PENNSYLVANIA )
: SS.
COUNTY OF ALLEGHENY )
On the 20th day of August 1997, before me personally came Harold J.
Ruttenberg, to me known, who, being by me duly sworn, did depose and say that he
resides at 300 South Craig Street, Pittsburgh, Pennsylvania 15213; that he is
the Chairman, Chief Executive Officer and Treasurer of American Locker Group
Incorporated, the corporation described in and which executed the above
instrument; and that he signed his name thereto by order of the board of
directors of said corporation.
KATHLEEN M. MURRARY
--------------------------
Notary Public
12
<PAGE>
Exhibit 10.2
U. S. POSTAL SERVICE: CONTRACT/ORDER MODIFICATION
- --------------------------------------------------------------------------------
1. MODIFICATION NO.: MO5 TO CONTRACT/ORDER NO.: 072368-96-B-0741
2. a. DATE ISSUED: 10/08/97 b. REQUEST NO.: 98-00333
c. FINANCE NO:
- --------------------------------------------------------------------------------
3. CONTRACTOR: 4. ISSUED BY:
AMERICAN LOCKER SECURITY U S POSTAL SERVICE
P O BOX 489 DENVER PURCHASING & MATERIALS
SERVICE CENTER
3300 S PARKER RD SUITE 400
JAMESTOWN NY 14702-0489 AURORA CO 80014-3500
ATTENTION: ROY GLOSSER FOR INFORMATION CALL:
(800) 828-9118 Michele Schuemann
(303) 369-1228
ACO CODE: 072368
- --------------------------------------------------------------------------------
5. The above numbered contract/order is modified as set forth in Block 5, by
modification issued pursuant to authority of Contracting Officer. The
contractor is required to sign and return one copy/copies of this
modification to the Issuing Office (See Block 4).
- --------------------------------------------------------------------------------
6. DESCRIPTION OF MODIFICATION:
REFERENCE: NATIONAL CONTRACTS - CENTRAL DELIVERY EQUIPMENT
TIN/SSN: 16-1068506 PARENT TIN: 16-0338330
The following agreement is reached between American Locker the U S Postal
Service on October 6, 1997, in reference to the termination of Item 08,
OPL Steel Pedestal.
In lieu of total implementation of the provisions of Clause B-11, Section
H.5.b, this agreement has been reached in the best interest of both
parties.
(Continuation of Modification 05 on Attachment 1)
Except as provided herein, all terms and conditions of the document
referenced in Block 1, as heretofore changed, remain unchanged and in full
force and effect.
- --------------------------------------------------------------------------------
7. ACCOUNTS PAYABLE DATA is unchanged.
- --------------------------------------------------------------------------------
8. SIGNATURES: CONTRACTOR
/S/ ROY J. GLOSSER 10/9/97 /S/ ROY C. SANDUSKY 10/9/97
- ------------------ ------- ------------------- -------
Signature Date Signature Date
ROY J. GLOSSER PRESIDENT ROY C. SANDUSKY
- ------------------- --------- -----------------------------
Name of Person Title Name of Contracting Officer
<PAGE>
ATTACHMENT 1
Contract No. 072368-96-B-0741, Modification No. 05
The following is incorporated into this contract, by mutual agreement:
1. Total buyout of a 45-day inventory of OPL Steel Pedestals, Item 08, is
determined to be a total of 2,300 pedestals.
2. The remaining inventory, of raw materials, estimated at 700 formed tubes,
700 front outriggers, and 700 back outriggers will be the responsibility
of American Locker to liquidate.
3. The OPL steel pedestal inventory will be sold until depletion of the
agreed to number of 2,300. American Locker will notify Denver PMSC at the
time the changeover occurs from steel pedestals to aluminum.
The above agreement relieves both parties, in whole, of any future claims
arising from the termination of Item 08 of the contract. All possible claims for
liquidated damages and raw materials are hereby waived by both parties by virtue
of this agreement.
<PAGE>
Exhibit 10.3
U. S. POSTAL SERVICE: CONTRACT/ORDER MODIFICATION
- --------------------------------------------------------------------------------
1. MODIFICATION NO.: MO6 TO CONTRACT/ORDER NO.: 072368-96-B-0741
2. a. DATE ISSUED: 10/23/97 b. REQUEST NO.: 98-00523
c. FINANCE NO:
- --------------------------------------------------------------------------------
3. CONTRACTOR: 4. ISSUED BY:
AMERICAN LOCKER SECURITY U S POSTAL SERVICE
P O BOX 489 DENVER PURCHASING & MATERIALS
SERVICE CENTER
3300 S PARKER RD SUITE 400
JAMESTOWN NY 14702-0489 AURORA CO 80014-3500
ATTENTION: ROY GLOSSER FOR INFORMATION CALL:
(800) 828-9118 Michele Schuemann
(303) 369-1228
ACO CODE: 072368
- --------------------------------------------------------------------------------
5. The above numbered contract/order is modified as set forth in Block 6, by
supplemental agreement entered into pursuant to authority of Contracting
Officer. The contractor is required to sign and return one copy/copies of
this modification to the Issuing Office (See Block 4).
- --------------------------------------------------------------------------------
6. DESCRIPTION OF MODIFICATION:
REFERENCE: NATIONAL CONTRACTS - CENTRAL DELIVERY EQUIPMENT
TIN: 16-1068506 PARENT TIN: 16-0338330
THE FOLLOWING PRICES ARE EFFECTIVE OCTOBER 27, 1997 THROUGH APRIL 14,
1998:
CBU TYPE I - FROM: $912.00 TO: $889.00
CBU TYPE II - FROM: $975.00 TO: $975.00 (NO CHANGE)
CBU TYPE III - FROM: $962.00 TO: $942.00
OPL - FROM: $239.00 TO: $248.00
OPL PEDESTAL - FROM: $ 75.00 TO: $ 75.00 (NO CHANGE)
(CONTINUATION OF MODIFICATION 06 ON ATTACHMENT 1)
Except as provided herein, all terms and conditions of the document
referenced in Block 1, as heretofore changed, remain unchanged and in full
force and effect.
- --------------------------------------------------------------------------------
7. ACCOUNTS PAYABLE DATA is unchanged.
- --------------------------------------------------------------------------------
8. SIGNATURES: CONTRACTOR
<PAGE>
/S/ ROY J. GLOSSER 10/24/97 /S/ MICHELE P. SCHUEMANN 10/24/97
- --------------------- ---------- ------------------------ --------
Signature Date Signature Date
ROY J. GLOSSER PRESIDENT MICHELE P. SCHUEMANN
- -------------------- ------------- ----------------------
Name of Person Title Name of Contracting Officer
<PAGE>
ATTACHMENT 1
072368-96-B-0741
ADD ITEM 09, ALUMINUM OPL PEDESTAL, TO THIS CONTRACT AT A PRICE OF $75.00 PER
UNIT.
MINIMUM QUANTITIES FOR ITEMS 01, 02, 03, 07, AND 09 ARE SET AT 1 (ONE) FOR THE
NEXT 6-MONTH PERIOD ENDING APRIL 14, 1998.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Exhibit 27
American Locker Group Incorporated
Financial Data Schedule
September 30, 1997
This schedule contains summary financial information extracted from SEC Form
10-QSB and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<CIK> 0000008855
<NAME> AMERICAN LOCKER GROUP INC.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<EXCHANGE-RATE> 1.0000
<CASH> $939,499
<SECURITIES> 0
<RECEIVABLES> 3,921,302
<ALLOWANCES> 346,063
<INVENTORY> 3,736,569
<CURRENT-ASSETS> 9,290,510
<PP&E> 8,196,412
<DEPRECIATION> 7,151,210
<TOTAL-ASSETS> 10,335,712
<CURRENT-LIABILITIES> 3,246,463
<BONDS> 0
0
0
<COMMON> 601,755
<OTHER-SE> 3,562,800
<TOTAL-LIABILITY-AND-EQUITY> 10,335,712
<SALES> 19,912,975
<TOTAL-REVENUES> 20,045,784
<CGS> 13,916,937
<TOTAL-COSTS> 13,916,937
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 9,000
<INTEREST-EXPENSE> 103,154
<INCOME-PRETAX> 2,102,038
<INCOME-TAX> 900,372
<INCOME-CONTINUING> 1,201,666
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,201,666
<EPS-PRIMARY> 1.52
<EPS-DILUTED> 1.52
</TABLE>
